What Nassim Taleb's Black Swan theory says — rare unpredictable events dominate history

What Long-Term Capital Management's failure showed — even Nobel Prize-winning models can blow up

Nobel models can't always predict extreme market events

What recency bias does — overweighting recent events in investment decisions

Recency bias leads investors to prioritize recent market trends over long-term historical data

What Taleb means by antifragility — systems that get stronger from disorder

Antifragility: systems that improve or thrive from stress and disorder

What the tulip mania of 1637 demonstrated — the first recorded speculative bubble

Tulip mania showed the potential for economic collapse due to irrational speculative bubbles

What did George Box mean by "All models are wrong, but some are useful," and how does this concept relate to the trade-off between model complexity and generalization in statistical learning theory?

George Box highlighted the inherent imperfection of models, emphasizing the balance between simplicity and predictive power in statistical learning

What Modern Portfolio Theory says — diversification reduces risk without reducing expected return

MPT asserts that diversification lowers unsystematic risk while maintaining expected return